Ice Dreams — Sample Plan - Business Plan Software and

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Ice Dreams — Sample Plan

Bu sin es sP lan Pro

This sample business plan was created using Business Plan Pro®—business planning software published by Palo Alto Software. This plan may be edited using Business Plan Pro and is one of 500+ sample plans available from within the software. To learn more about Business Plan Pro and other planning products for small and medium sized businesses, visit us at www.paloalto.com

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This is a sample business plan and the names, locations and numbers may have been changed, and substantial portions of the original plan text may have been omitted to preserve confidentiality and proprietary information. You are welcome to use this plan as a starting point to create your own, but you do not have permission to reproduce, publish, distribute or even copy this plan as it exists here. Requests for reprints, academic use, and other dissemination of this sample plan should be emailed to the marketing department of Palo Alto Software at [email protected]. For product information visit our Website: www.paloalto.com or call: 1-800-229-7526.

Copyright © Palo Alto Software, Inc., 1995-2006. All rights reserved.

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Confidentiality Agreement

The undersigned reader acknowledges that the information provided by _________________________ in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of _________________________. It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to _________________________.


Upon request, this document is to be immediately returned to _________________________. ___________________ Signature

___________________ Name (typed or printed) ___________________ Date

This is a business plan. It does not imply an offering of securities.

Table of Contents Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 2 2 2

2.0

Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Company Locations and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2 2 3 4

3.0

Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Product Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Competitive Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Sales Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Sourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Future Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 5 5 5 5 5

4.0

Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Industry Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1 Industry Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.2 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.3 Main Competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6 6 6 7 8 8 8

5.0

Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.1 Positioning Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.2 Pricing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.3 Promotion Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.4 Distribution Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9 9 9 9 10 10 10 10

6.0

Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Management Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11 11 11 12

7.0

Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Key Financial Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13 13 14 15 16 17 19 19

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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1.0


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1.0 Executive Summary Ice Dreams will sell shave ice as its primary product in addition to soft drinks and frosty Latin drinks called licuados. Shave ice is the hottest new dessert since frozen yogurt! Shave ice is heating up rapidly and shows no sign of cooling (Crystal Fresh, Inc., 1995). Shave ice has been around for many years, beginning in Asia, then becoming popular in Hawaii. People would shave ice by hand, creating a cold, flaky snow. Then they'd top it with fruit juices to create a refreshing treat. Something this good couldn't remain a secret. In recent years, the taste for shave ice has spread all over the world. Shave ice is much different than a sno-cone in that it is made by a small counter-top machine that shaves ice rather than grinding it like a sno-cone machine, which results in ice so fine that it rivals real snow! The snow is then placed in bowl or cup and filled with high quality tropical fruit flavors. Because the snow is so soft the syrup is held within its tender texture versus settling to the bottom like traditional sno-cones. Since the syrup is absorbed into the snow, it must be eaten with a spoon instead of a straw.


Because shave ice is so tender and made with the thickest, best-tasting tropical fruit flavors, it is preferred by adults and children of all ages and ethnic backgrounds. A drive-through business will be built on privately-owned commercial property on Highway 86 (Adams Avenue) in El Centro, California. Other products which will be incorporated into the business including beverages (soft drinks and licuados).

Highlights

$120,000 $100,000

$80,000 $60,000

Sales Gross Margin Net Profit

$40,000 $20,000 $0

1997

1998

1999

Copyright © Palo Alto Software, Inc. 1995-2003 All rights reserved. www.paloalto.com No reproduction, publication, or distribution. Pg 1


1. 2. 3. 4.

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1.1 Objectives To construct a drive-through building (12' x 20') on existing privately-owned commercial property (50' x 120'). To produce a net profit of at least $50,000 by the third year of operation. To sell 20 different tropical and Mexican flavored syrups. To sell other products such as soft drinks and licuados.

1.2 Mission


Ice Dreams will produce and sell shave ice with 20 different flavored syrups, soft drinks, and licuados to consumers in El Centro, California. Retail customers will be in the low- to midincome bracket, and will range in age from children to adults.

1.3 Keys to Success

The keys to success are: 1. 2.

3. 4. 5. 6.

Will be the first business of its kind in the city of El Centro, California. Business will be located on a major city highway, next to several housing developments, the city pool, near schools and parks, and along a major restaurant and motel strip. Product quality will include a large variety of tropical and Mexican flavored syrups. Business has the potential for expansion into other Imperial County communities. City of El Centro experiences warm to hot weather approximately seven months of the year. Two-way traffic on Highway 86 averages 48,300 vehicles on a daily basis.

2.0 Company Summary

Ice Dreams will be known for selling shave ice with 20 different tropical and Mexican flavored syrups to children and adults in El Centro, California. Other products will include soft drinks and licuados.

2.1 Company Ownership

Ice Dreams will be owned by Ofelia R. Arellano as a sole proprietorship.



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2.2 Start-up Summary Start-up costs will be approximately $52,010 which will include facility construction including sidewalks, parking, inventory, mandatory city permits, and other expenses associated with opening this business. The start-up costs will be financed through a loan. Appendix A provides more detailed information regarding permit requirements, equipment, construction costs, and land improvements required to open this new business. Table: Start-up Start-up Requirements $100 $1,200 $34,710 $36,010


Start-up Expenses Consultants Insurance Other Total Start-up Expenses Start-up Assets Needed Cash Balance on Starting Date Start-up Inventory Other Current Assets Total Current Assets

$10,000 $1,325 $675 $12,000

Long-term Assets Total Assets Total Requirements

$4,000 $16,000 $52,010

Funding

Investment Investor 1 Other Total Investment

$0 $10,000 $10,000

Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Current Liabilities

$0 $42,010 $0 $42,010

Long-term Liabilities Total Liabilities

$0 $42,010

Loss at Start-up Total Capital Total Capital and Liabilities

($36,010) ($26,010) $16,000



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Start-up

$45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000


$0

Expenses

Assets

Investment

Loans

2.3 Company Locations and Facilities

Ice Dreams will be located on Highway 86 in El Centro, California which experiences a high volume of traffic on a daily basis. According to a study by Cal Trans (Traffic Volumes, 1995), approximately 48,300 vehicles pass through this location on a daily basis making it an ideal location for business. The majority of traffic enters and exits via Imperial Avenue and Fourth Avenue traveling through Highway 86. A 240 square foot drive-through facility will be built on a privately-owned commercial property which will also include parking facilities, landscaping, and a small sitting area. Other major businesses located on Highway 86 include Carl's Jr., Roberto's Restaurant, La Fonda Restaurant, Raging Bull Restaurant, China Restaurant, Donut Shop, Steak House, Big John gas station, Recreation Center, and several motels. The appendices provide additional information on the company facilities, a tentative plot plan, and highlights of the traffic study conducted by Cal Trans.

3.0 Products

Main products to be sold through the Ice Dreams business will be shave ice topped with tropical and Mexican flavored syrups in three main sizes: small, medium, and large. Other products will include three soft drinks (Sprite, Coke, and Diet-Coke), and licuados.



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3.1 Product Description One major product will be sold through Ice Dreams which will include shave ice topped with tropical and Mexican flavored syrups. Twenty different tropical and Mexican flavored syrups will be sold and include the following: Wild Watermelon, Pina Colada, Pink Lemonade, Guava Grape, Cherry Jubilee, Root Beer, Kiwi, Strawberry, Blue Bubble Gum, Orange Mango, Raspberry Red, Luscious Lime, Bodacious Banana, Tamarindo, Jamaica, Hortacha, Melon, Papaya, Manzana, and Limon. Other products will include soft-drinks in three flavors: Coke, Diet-Coke, and Sprite, and licuados in three flavors (strawberry, banana and mango).

3.2 Competitive Comparison


No other business in El Centro specifically caters to the shaved ice market on a large scale. It is anticipated that prices will be competitive with other businesses who sell shave ice on a smaller basis.

3.3 Sales Literature

Sales literature to be distributed to the general community will include fliers, advertisement in the local newspaper (Imperial Valley Press), and other print media.

3.4 Sourcing

Ice Dreams will purchase products from Crystal Fresh, Inc. which manufactures and distributes high-quality syrups and ice shavers. All equipment and supplies are available through a regional distributor. Mexican flavored syrups will be purchased in Mexicali, Baja California, Mexico.

3.5 Future Products

It is anticipated that 10-15 additional syrups will be added such as Spearmint, Black Cherry, Cinnamon, Blueberry, Peach, Red Apple, Tutti Frutti, Coconut, Cola, Green Apple, Tangerine, and Vanilla. Also, future products to be sold will include ice cream in vanilla and chocolate flavors.



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4.0 Market Analysis Summary El Centro is geographically situated at the junction of major east-west and north-south transportation routes. El Centro is also referred to as the "center of opportunity" with benefits created by the North American Free Trade Agreement (NAFTA) becoming one of Southern California's most promising new commercial/industrial areas. El Centro is accessible via Interstate 8, State Highway 111, and State Highway 86, where Ice Dreams will be located. Shave ice is an ideal business for El Centro given both the potential market segment, location, and climate. Utilizing averaged priced units ($1.25) for shave ice and other products to be sold, the shave ice business has the potential market of $104,446 gross sales by the third year of operation.


4.1 Market Segmentation

According to Advertising Age (September, 1995), premium ice cream and frozen yogurt products are losing market share to mid-priced and other frozen dessert products. Information Resources reported that frozen ice products comprised a third of the $2.4 billion ice cream category for the year ending May 21, 1995, generating $717.7 million, up 9.3% from the previous year. Based on this information, it is anticipated that the frozen dessert market can be divided into two customer segments. The first segment prefers premium ice cream and frozen yogurt products. The other segment obviously includes those that prefer frozen ice products. Shave ice products are ideal for today's health-conscious consumers. They boast no fat, no cholesterol, and are relatively low in calories. Ice Dreams will target all segments of El Centro's population: children, teenagers, and adults. The Hispanic population will be of special interest since it comprises 65% of El Centro's total population. This population will be targeted with Mexican flavored syrups and licuados.

4.2 Target Market Segment Strategy

Ice Dreams will target the low- to mid-income consumers who want to have a high quality dessert for moderate prices. Ice Dream's shave ice meets the quality required by these customers since it will also cater to the large Latino population in El Centro with its Mexican flavored syrups.



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4.3 Industry Analysis One of the best known shave ice businesses is Sno Biz Shave Ice under the parent company of Crystal Fresh, Inc. Dealerships such as Sno Biz have demonstrated the success and feasibility of selling shave ice. The Sno Biz dealership has been in existence for the last 11 years with over 3,000 individual dealerships throughout the United States. Sno Biz syrups products are also sold in Wal Marts throughout the country. While no Sno Biz dealership currently exists in California, Sno Biz products are sold at the San Diego Zoo, Lion Country Safari, and the San Diego Military base with great success. The potential success for selling shave ice is attributed to the following: 1. 2. 3.


4. 5.

Compared to other food service products, Ice Dreams will be a relatively simple business to operate. Shave ice is similar to a Mexican favorite called raspado, but because it is softer and tastier, it is preferred over raspados. Shave ice has a low food cost and is easy to prepare, which keeps speed-of-service at optimum levels to keep up with high-traffic volumes. Ice Dreams will be easy to maintain and clean. Shave ice is a product that has yielded a considerable profit in terms of cost to produce at $0.16. Shave ice is an ideal product for the health-conscious consumer.

6.

Market research conducted in El Centro did surface one raspado (sno-cone) business on a small scale called "Snow Shack" located on State Street. Snow Shack consists of a small trailer that accommodates only one employee. Sno-cones are sold in cups at prices ranging from $1.00 (small), $1.25 (medium) to $1.50 (large). Sno-cones were also found to be sold at Garcia's Food Market and Wal Mart. Each sold snocones in one regular size at $1.00 each. Research conducted in Bullhead City, Arizona noted that the Sno Biz dealership only sells shave ice as their primary product. Shave ice units sold for $1.25 (small), $1.75 (medium) to $2.25 (large) per unit. In interviewing the current owner, he indicated that during his first year in business he was selling 200 units per day. Research in San Diego, California revealed that shave ice is sold along with other products. Several businesses in Mission Bay sold shave ice with prices ranging from $1.79 (small), $1.99 (medium) and $2.39 (large). In terms of licuados, prices were $2.79 (regular) and $3.15 (large). Research conducted in Honolulu, Hawaii, showed that in some locations, shave ice sold as high as $5.00 for a regular size. However, the majority of sno-cones were sold by the flavor and not necessarily by the size. For example, one flavor was $1.79, two flavors were $2.29, and three flavors sold for $2.79.



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4.3.1 Industry Participants The shaved ice industry in El Centro, California currently has no key players since no other business of this type currently exists in the Imperial Valley.

4.3.2 Competition and Buying Patterns

The shave ice business will be new to El Centro. Competitors in this type of business primarily sell raspados or sno-cones and do not focus on the shave ice market. One major competitor is the "Snow Shack" located on State Street. Snow Shack sells sno-cones through a small, one person trailer with limited choices of syrups. Other competitors sell sno-cones through Garcia's Market and the Wal-Mart store which also have limited syrup selections and do not necessarily focus on the sno-cone or shave ice industry as their primary product.


The keys to success will definitely focus on selling shave ice and not sno-cones made with coarse ice and selling high quality syrups. Prices will also be competitive with those of the competition.

4.3.3 Main Competitors

Main competitors include the Snow Shack, Garcia's Market, and Wal-Mart. The following are strengths and weaknesses of each. • Snow Shack • Strengths: The main strength of Snow Shack is that it is the only business in El Centro that caters to the sno-cone market. It also has very reasonable prices. • Weaknesses: The primary weakness of Snow Shack is that it does not sell shave ice but rather sno-cones made from very coarse ice. Syrups are also not of good quality. • Garcia's Market • Strengths: The main strength of sno-cones sold by Garcia's Market is their low price of $1.00 and the convenience to the shopper in buying sno-cones while doing their shopping. • Weaknesses: The main weakness of sno-cones sold by Garcia's Market is that they do not sell quality syrups and prefer to sell the more inexpensive brand with lower quality taste. • Wal-Mart • Strengths: Main strength of sno-cones sold by Wal-Mart is the convenience to the shopper and low price. • Weaknesses: Wal-Mart's weakness, like Garcia's Market, is that they do not sell quality syrups. Also, the sno-cone business is not their primary focus or product.



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5.0 Strategy and Implementation Summary Ice Dreams is planning for slow growth by expanding flavors available from 20 to 30 in year two of operation. Also, an additional product to be sold in year two will include ice cream in flavors of vanilla and chocolate.

5.1 Marketing Strategy

Ice Dream's overall marketing strategy will be to create an image of offering the highest quality shave ice in Imperial County. The business will be located in a high traffic area of El Centro. Customers will be reached through advertisements such as fliers, newspaper ads, and through its grand opening ceremonies.


A special marketing program will also be incorporated by offering special coupon prices for nearby restaurants, motels, city pool, the donut shop, and the gas station to customers who purchase any product at Ice Dreams.

5.1.1 Positioning Statement

Distribution of shave ice will be through the business facility only. It is anticipated that in the future, a small portable ice shaver will be purchased such that the product could be sold on site at various fund raising functions through churches, schools, etc.

5.1.2 Pricing Strategy

Shave ice will be offered at the following prices: • Small $1.00 • Medium $1.25 • Large $1.50

Soft Drinks

• Regular $0.79 • Large $0.99

Licuados

• Regular $1.35

Products will be sold on a cash basis only.



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5.1.3 Promotion Strategy Ice Dreams will promote shave ice to customers by: 1. 2. 3. 4. 5.

Flier distribution to consumers' homes within a five-mile radius. Newspaper advertisements will be purchased during the first three months of business until a clientele is built. Ice Dreams will offer discounts to recreational groups such as children/adult baseball and football teams who play in nearby facilities. Promoting products for an introductory price at its Grand Opening. Ice Dreams will "adopt a school" and provide shave ice to individuals who are selected for having excellent attendance, good grades, and good citizenship. Other incentives will include sponsoring a good attendance program by purchasing a bike and raffling it to students with the best attendance. This will be a promotional strategy to encourage business.


5.1.4 Distribution Strategy

Major marketing will be conducted through newspaper advertisements and local flier distribution during the first three months of operation. Total costs will be approximately $500.

5.2 Sales Strategy

Sales strategy will be directly linked to marketing programs since all sales will be through the business facility only.

5.2.1 Sales Forecast

Consumer sales will start in January, 1997 (or sooner if construction is completed before the targeted date) with a grand opening anticipated by then. Sales and units costs for the first six months of 1997 are shown in the sales forecast as projected numbers. As indicated, primary sales will occur during the peak warm weather months as noted in the following chart and table.



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Sales Monthly $6,000 $5,000 $4,000

Sales

$3,000

Other

$2,000 $1,000


$0

Jan Feb Mar Apr May Jun

Jul

Aug Sep Oct Nov Dec

6.0 Management Summary

Ice Dreams will hire an employee to assist with the business. Ice Dreams will require minimum daily supervision after it has been established since all three products are fairly easy to make.

6.1 Organizational Structure

Ofelia R. Arellano, the owner, will have one individual assisting her with the business. Long range plans will include a second employee to assist with the weekend hours.

6.2 Management Team

Ofelia R. Arellano is the most important member of the management team. Dr. Arellano is a graduate of the University of California, Santa Barbara with several advanced degrees (Masters and Doctorate in Psychology). She has spent the last six years working as an administrator overseeing a budget of approximately $800,000. Ofelia will oversee the business primarily during the weekend hours and Frank Arellano will oversee the business during weekdays along with one employee. Business expertise include: Budget Control

• History Based Budgeting • Object-Code Budgeting • Program Budgeting Copyright © Palo Alto Software, Inc. 1995-2003 All rights reserved. www.paloalto.com No reproduction, publication, or distribution. Pg 11

Ice Dreams — Sample Plan Personnel Management • Management by Goals and Objectives Strategic Planning • Long-Range Planning • Total Quality Management • Operational Planning Public Relations • Advertising for Educational Purposes • Marketing Research • Consulting


Community Leadership

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• Planned Programming Budgeting Systems

• Advisory Boards • Business and Educational Partnerships

City Planning and Development

• Board of Director, San Ysidro Planning and Development Group

Business Needs Assessment and Consultation

• Board of Directors, San Ysidro Chamber of Commerce

Frank Arellano will serve as a consultant on a volunteer basis. Mr. Arellano spent over 35 years in the retail business handling marketing and inventory for a major food chain. He is familiar with all aspects of business management and operations having owned and operated his own grocery store in El Centro. Mr. Arellano will also assist in the building design, landscaping layout and business marketing. Mr. Arellano will supervise the business during the week days which means managing one employee.

6.3 Personnel Plan

Monthly personnel cost estimates are included in the following table.


Ice Dreams — Sample Plan Table: Personnel

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Personnel Plan

1997 $10,800 $0 1 $10,800

Assistant Owner Total People Total Payroll

7.0 Financial Plan

1998 $11,232 $0 1 $11,232

1999 $11,681 $0 1 $11,681

• We want to finance growth mainly through cash flow. We recognized that this means we will have to grow slowly. • The most important indicator in our case is that minimal inventory will have to be stored for these products.


7.1 Important Assumptions

Monthly sales are the largest indicator for this business. There are some seasonal variations with the months of March through September being the highest sales months. Table: General Assumptions General Assumptions

Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other

1997 1 13.50% 0.00% 30.00% 0

1998 2 13.50% 0.00% 30.00% 0

1999 3 13.50% 0.00% 30.00% 0



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7.2 Key Financial Indicators The following Benchmark chart shows our key financial indicators.

Benchmarks 4.0 3.0 2.0 1.0

1997 1998 1999


0.0



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7.3 Break-even Analysis The following table and chart show the current break-even analysis. The operation will require sales of approximately $2,900 to break even during the first year of operation.

Break-even Analysis $2,000 $1,500 $1,000 $500 $0 ($500) ($1,000)


($1,500) ($2,000)

$0

$1,000

$2,000

$3,000

$4,000

$5,000

Monthly break-even point

Break-even point = where line intersects with 0

Table: Break-even Analysis

Break-even Analysis: Monthly Units Break-even Monthly Revenue Break-even

3,125 $3,125

Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost

$1.00 $0.36 $2,000



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7.4 Projected Profit and Loss We expect a profit of $10,000 in year one; $23,000 in year two; and $37,000 in year three of operation. Table: Profit and Loss Pro Forma Profit and Loss Sales Direct Costs of Goods Other

1998 $77,383 $17,772 $0 -----------$17,772 $59,611 77.03%

1999 $104,446 $24,227 $0 -----------$24,227 $80,219 76.80%

$10,800 $1,410 $2,196 $0 $1,720 $1,200 $0 $0 $2,484 $0 -----------$19,810 $20,293 $5,672 $4,386 $10,235 19.60%

$11,232 $1,466 $2,284 $0 $1,789 $1,248 $0 $0 $2,583 $0 -----------$20,602 $39,009 $5,672 $10,001 $23,336 30.16%

$11,681 $1,525 $2,375 $0 $1,861 $1,298 $0 $0 $2,687 $0 -----------$21,427 $58,792 $5,672 $15,936 $37,184 35.60%


Cost of Goods Sold Gross Margin Gross Margin % Expenses: Payroll Sales and Marketing and Other Expenses Depreciation Leased Equipment Utilities Insurance Rent Other Payroll Taxes Other

1997 $52,217 $12,114 $0 -----------$12,114 $40,103 76.80%

Total Operating Expenses Profit Before Interest and Taxes Interest Expense Taxes Incurred Net Profit Net Profit/Sales



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7.5 Projected Cash Flow Projected cash flow is estimated as follows for the next three years: • 1997 - $24,000 • 1998 - $36,000 • 1999 - $50,000

Cash $20,000

$15,000


$10,000

$5,000

Net Cash Flow Cash Balance

$0

($5,000)

Jan Feb Mar Apr May Jun

Jul

Aug Sep Oct Nov Dec



Pro Forma Cash Flow

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Table: Cash Flow 1997

1998

1999

$52,217 $0 $52,217

$77,383 $0 $77,383

$104,446 $0 $104,446

$0 $3 $0 $0 $0 $0 $0 $52,220

$0 $0 $0 $0 $0 $0 $0 $77,383

$0 $0 $0 $0 $0 $0 $0 $104,446

1997

1998

1999

$0 $38,254 $38,254

$0 $51,652 $51,652

$0 $64,796 $64,796

Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent

$0 $0 $0 $10,500 $0 $0 $0 $48,754

$0 $0 $0 $10,500 $0 $0 $0 $62,152

$0 $0 $0 $10,500 $0 $0 $0 $75,296


$3,466 $13,466

$15,231 $28,697

$29,150 $57,847

Cash Received Cash from Operations: Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received


Expenditures Expenditures from Operations: Cash Spending Payment of Accounts Payable Subtotal Spent on Operations



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7.6 Projected Balance Sheet The balance sheet shows a slow but steady upward growth in net worth after initial start-up as follows: • 1997: ($16,000) (Negative) • 1998: $7,500 • 1999: $45,000 Table: Balance Sheet Pro Forma Balance Sheet 1997 $13,466 $312 $675 $14,453

1998 $28,697 $458 $675 $29,830


Assets Current Assets Cash Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets

1999 $57,847 $624 $675 $59,146

$4,000 $2,196 $1,804 $16,257

$4,000 $4,480 ($480) $29,350

$4,000 $6,855 ($2,855) $56,291

1997 $519 $42,013 $0 $42,532

1998 $776 $42,013 $0 $42,789

1999 $1,032 $42,013 $0 $43,045


($10,500) $32,032

($21,000) $21,789

($31,500) $11,545

Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth

$10,000 ($36,010) $10,235 ($15,775) $16,257 ($15,775)

$10,000 ($25,775) $23,336 $7,561 $29,350 $7,561

$10,000 ($2,439) $37,184 $44,745 $56,291 $44,745

Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities

7.7 Business Ratios

Standard business ratios are included in the table that follows. The ratios show a plan for balanced, healthy growth. The standard industry indicators shown are for SIC 5812, eating places.



Ratio Analysis

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Table: Ratios 1997 0.00%

1998 48.20%

1999 34.97%

Industry Profile 7.60%

Percent of Total Assets Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets

0.00% 1.92% 4.15% 88.90% 11.10% 100.00%

0.00% 1.56% 2.30% 101.64% -1.64% 100.00%

0.00% 1.11% 1.20% 105.07% -5.07% 100.00%

4.50% 3.60% 35.60% 43.70% 56.30% 100.00%

Current Liabilities Long-term Liabilities Total Liabilities Net Worth

261.62% -64.59% 197.03% -97.03%

145.79% -71.55% 74.24% 25.76%

76.47% -55.96% 20.51% 79.49%

32.70% 28.50% 61.20% 38.80%

Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes

100.00% 76.80% 57.20% 1.15% 38.86%

100.00% 77.03% 46.88% 0.81% 50.41%

100.00% 76.80% 41.20% 0.62% 56.29%

100.00% 60.50% 39.80% 3.20% 0.70%

Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets

0.34 0.33 197.03% -92.69% 89.94%

0.70 0.69 74.24% 440.92% 113.59%

1.37 1.36 20.51% 118.72% 94.37%

0.98 0.65 61.20% 1.70% 4.30%

1997 19.60% 0.00%

1998 30.16% 308.64%

1999 35.60% 83.10%

n.a n.a

0.00 0 11.84 74.69 18 3.21

0.00 0 46.18 66.90 4 2.64

0.00 0 44.79 63.02 5 1.86

n.a n.a n.a n.a n.a n.a

0.00 1.33

2.88 1.96

0.26 3.73

n.a n.a

($28,079) 3.58

($12,959) 6.88

$16,100 10.37

n.a n.a

0.31 262% 0.33 0.00 0.00

0.38 146% 0.69 10.23 0.00

0.54 76% 1.36 2.33 0.00

n.a n.a n.a n.a n.a


Sales Growth

Additional Ratios Net Profit Margin Return on Equity

Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage

Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout


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Appendix Ice Dreams — Sample Plan Appendix Table: Sales Forecast Sales Forecast Sales Sales Other Total Sales

Feb $2,751 $0 $2,751

Mar $5,691 $0 $5,691

Apr $5,691 $0 $5,691

May $5,691 $0 $5,691

Jun $5,691 $0 $5,691

Jul $5,691 $0 $5,691

Aug $5,691 $0 $5,691

Sep $5,691 $0 $5,691

Oct $2,751 $0 $2,751

Nov $2,751 $0 $2,751

Dec $1,376 $0 $1,376

Jan $623 $0 $623

Feb $623 $0 $623

Mar $1,330 $0 $1,330

Apr $1,330 $0 $1,330

May $1,330 $0 $1,330

Jun $1,330 $0 $1,330

Jul $1,330 $0 $1,330

Aug $1,330 $0 $1,330

Sep $1,330 $0 $1,330

Oct $623 $0 $623

Nov $623 $0 $623

Dec $312 $0 $312

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Direct Cost of Sales Sales Other Subtotal Direct Cost of Sales

Jan $2,751 $0 $2,751

Copyright © Palo Alto Software, Inc. 1995-2003 All rights reserved. www.paloalto.com No reproduction, publication, or distribution.

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Appendix Ice Dreams — Sample Plan Appendix Table: Personnel Personnel Plan Jan $900 $0 1 $900

Feb $900 $0 1 $900

Mar $900 $0 1 $900

Apr $900 $0 1 $900

May $900 $0 1 $900

Jun $900 $0 1 $900

Jul $900 $0 1 $900

Aug $900 $0 1 $900

Sep $900 $0 1 $900

Oct $900 $0 1 $900

Nov $900 $0 1 $900

Dec $900 $0 1 $900

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Assistant Owner Total People Total Payroll


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Appendix Ice Dreams — Sample Plan Appendix Table: General Assumptions General Assumptions Jan 1 13.50% 0.00% 30.00% 0

Feb 2 13.50% 0.00% 30.00% 0

Mar 3 13.50% 0.00% 30.00% 0

Apr 4 13.50% 0.00% 30.00% 0

May 5 13.50% 0.00% 30.00% 0

Jun 6 13.50% 0.00% 30.00% 0

Jul 7 13.50% 0.00% 30.00% 0

Aug 8 13.50% 0.00% 30.00% 0

Sep 9 13.50% 0.00% 30.00% 0

Oct 10 13.50% 0.00% 30.00% 0

Nov 11 13.50% 0.00% 30.00% 0

Dec 12 13.50% 0.00% 30.00% 0

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Pla nP ro

Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other


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Appendix Ice Dreams — Sample Plan Appendix Table: Profit and Loss Pro Forma Profit and Loss

Total Operating Expenses Profit Before Interest and Taxes Interest Expense Taxes Incurred Net Profit Net Profit/Sales

23%

Feb $2,751 $623 $0 -----------$623 $2,128 77.35%

Mar $5,691 $1,330 $0 -----------$1,330 $4,361 76.63%

Apr $5,691 $1,330 $0 -----------$1,330 $4,361 76.63%

May $5,691 $1,330 $0 -----------$1,330 $4,361 76.63%

Jun $5,691 $1,330 $0 -----------$1,330 $4,361 76.63%

Jul $5,691 $1,330 $0 -----------$1,330 $4,361 76.63%

Aug $5,691 $1,330 $0 -----------$1,330 $4,361 76.63%

Sep $5,691 $1,330 $0 -----------$1,330 $4,361 76.63%

Oct $2,751 $623 $0 -----------$623 $2,128 77.35%

Nov $2,751 $623 $0 -----------$623 $2,128 77.35%

Dec $1,376 $312 $0 -----------$312 $1,064 77.33%

$900 $180 $183 $0 $85 $100 $0 $0 $207 $0 -----------$1,655 $473 $473 $0 $0 0.01%

$900 $180 $183 $0 $85 $100 $0 $0 $207 $0 -----------$1,655 $473 $473 $0 $0 0.01%

$900 $105 $183 $0 $85 $100 $0 $0 $207 $0 -----------$1,580 $2,781 $473 $693 $1,616 28.39%

$900 $105 $183 $0 $85 $100 $0 $0 $207 $0 -----------$1,580 $2,781 $473 $693 $1,616 28.39%

$900 $105 $183 $0 $85 $100 $0 $0 $207 $0 -----------$1,580 $2,781 $473 $693 $1,616 28.39%

$900 $105 $183 $0 $185 $100 $0 $0 $207 $0 -----------$1,680 $2,681 $473 $663 $1,546 27.16%

$900 $105 $183 $0 $185 $100 $0 $0 $207 $0 -----------$1,680 $2,681 $473 $663 $1,546 27.16%

$900 $105 $183 $0 $185 $100 $0 $0 $207 $0 -----------$1,680 $2,681 $473 $663 $1,546 27.16%

$900 $105 $183 $0 $185 $100 $0 $0 $207 $0 -----------$1,680 $2,681 $473 $663 $1,546 27.16%

$900 $105 $183 $0 $185 $100 $0 $0 $207 $0 -----------$1,680 $448 $473 ($7) ($17) -0.63%

$900 $105 $183 $0 $185 $100 $0 $0 $207 $0 -----------$1,680 $448 $473 ($7) ($17) -0.63%

$900 $105 $183 $0 $185 $100 $0 $0 $207 $0 -----------$1,680 ($616) $473 ($327) ($762) -55.38%

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Cost of Goods Sold Gross Margin Gross Margin % Expenses: Payroll Sales and Marketing and Other Expenses Depreciation Leased Equipment Utilities Insurance Rent Other Payroll Taxes Other

Jan $2,751 $623 $0 -----------$623 $2,128 77.35%

Pla nP ro

Sales Direct Costs of Goods Other


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Appendix Ice Dreams — Sample Plan Appendix Table: Cash Flow Pro Forma Cash Flow

Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received

0.00%

Feb

Mar

Apr

$2,751 $0 $2,751

$2,751 $0 $2,751

$5,691 $0 $5,691

$5,691 $0 $5,691

$0 $0 $0 $0 $0 $0 $0 $2,751

$0 $0 $0 $0 $0 $0 $0 $2,751

$0 $0 $0 $0 $0 $0 $0 $5,691

$0 $0 $0 $0 $0 $0 $0 $5,691

Feb

Mar

$0 $1,963 $1,963

Expenditures Expenditures from Operations: Cash Spending Payment of Accounts Payable Subtotal Spent on Operations

$0 $1,135 $1,135

Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent

$0 $0 $0 $875 $0 $0 $0 $2,010 $741 $10,741

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$5,691 $0 $5,691

$5,691 $0 $5,691

$5,691 $0 $5,691

$5,691 $0 $5,691

$5,691 $0 $5,691

$2,751 $0 $2,751

$2,751 $0 $2,751

$1,376 $0 $1,376

$0 $0 $0 $0 $0 $0 $0 $5,691

$0 $3 $0 $0 $0 $0 $0 $5,694

$0 $0 $0 $0 $0 $0 $0 $5,691

$0 $0 $0 $0 $0 $0 $0 $5,691

$0 $0 $0 $0 $0 $0 $0 $5,691

$0 $0 $0 $0 $0 $0 $0 $2,751

$0 $0 $0 $0 $0 $0 $0 $2,751

$0 $0 $0 $0 $0 $0 $0 $1,376

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$0 $2,559 $2,559

$0 $4,576 $4,576

$0 $3,892 $3,892

$0 $3,894 $3,894

$0 $3,962 $3,962

$0 $3,962 $3,962

$0 $3,962 $3,962

$0 $3,895 $3,895

$0 $1,980 $1,980

$0 $2,473 $2,473

$0 $0 $0 $875 $0 $0 $0 $2,838

$0 $0 $0 $875 $0 $0 $0 $3,434

$0 $0 $0 $875 $0 $0 $0 $5,451

$0 $0 $0 $875 $0 $0 $0 $4,767

$0 $0 $0 $875 $0 $0 $0 $4,769

$0 $0 $0 $875 $0 $0 $0 $4,837

$0 $0 $0 $875 $0 $0 $0 $4,837

$0 $0 $0 $875 $0 $0 $0 $4,837

$0 $0 $0 $875 $0 $0 $0 $4,770

$0 $0 $0 $875 $0 $0 $0 $2,855

$0 $0 $0 $875 $0 $0 $0 $3,348

($87) $10,654

$2,257 $12,911

$240 $13,152

$924 $14,075

$925 $15,000

$854 $15,854

$854 $16,708

$854 $17,562

($2,019) $15,542

($104) $15,438

($1,972) $13,466

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Jan

May

Pla nP ro

Cash Received Cash from Operations: Cash Sales Cash from Receivables Subtotal Cash from Operations

Jan


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Appendix Ice Dreams — Sample Plan Appendix Table: Balance Sheet Pro Forma Balance Sheet Assets Current Assets Cash Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets

Jan $10,741 $702 $675 $12,118

Feb $10,654 $623 $675 $11,952

Mar $12,911 $1,330 $675 $14,916

Apr $13,152 $1,330 $675 $15,157

May $14,075 $1,330 $675 $16,080

Jun $15,000 $1,330 $675 $17,005

Jul $15,854 $1,330 $675 $17,859

Aug $16,708 $1,330 $675 $18,713

Sep $17,562 $1,330 $675 $19,567

Oct $15,542 $707 $675 $16,924

Nov $15,438 $623 $675 $16,736

Dec $13,466 $312 $675 $14,453

$4,000 $0 $4,000 $16,000

$4,000 $183 $3,817 $15,935

$4,000 $366 $3,634 $15,586

$4,000 $549 $3,451 $18,367

$4,000 $732 $3,268 $18,425

$4,000 $915 $3,085 $19,165

$4,000 $1,098 $2,902 $19,907

$4,000 $1,281 $2,719 $20,578

$4,000 $1,464 $2,536 $21,249

$4,000 $1,647 $2,353 $21,920

$4,000 $1,830 $2,170 $19,094

$4,000 $2,013 $1,987 $18,723

$4,000 $2,196 $1,804 $16,257

Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities

$0 $42,010 $0 $42,010

Jan $810 $42,010 $0 $42,820

Feb $1,336 $42,010 $0 $43,346

Mar $3,376 $42,010 $0 $45,386

Apr $2,692 $42,010 $0 $44,702

May $2,692 $42,010 $0 $44,702

Jun $2,760 $42,013 $0 $44,773

Jul $2,760 $42,013 $0 $44,773

Aug $2,760 $42,013 $0 $44,773

Sep $2,760 $42,013 $0 $44,773

Oct $827 $42,013 $0 $42,840

Nov $1,348 $42,013 $0 $43,361

Dec $519 $42,013 $0 $42,532


$0 $42,010

($875) $41,945

($1,750) $41,596

($2,625) $42,761

($3,500) $41,202

($4,375) $40,327

($5,250) $39,523

($6,125) $38,648

($7,000) $37,773

($7,875) $36,898

($8,750) $34,090

($9,625) $33,736

($10,500) $32,032

$10,000 ($36,010) $0 ($26,010) $16,000 ($26,010)

$10,000 ($36,010) $0 ($26,010) $15,935 ($26,010)

$10,000 ($36,010) $1 ($26,009) $15,586 ($26,009)

$10,000 ($36,010) $1,616 ($24,394) $18,367 ($24,394)

$10,000 ($36,010) $3,232 ($22,778) $18,425 ($22,778)

$10,000 ($36,010) $4,848 ($21,162) $19,165 ($21,162)

$10,000 ($36,010) $6,394 ($19,616) $19,907 ($19,616)

$10,000 ($36,010) $7,940 ($18,070) $20,578 ($18,070)

$10,000 ($36,010) $9,486 ($16,524) $21,249 ($16,524)

$10,000 ($36,010) $11,032 ($14,978) $21,920 ($14,978)

$10,000 ($36,010) $11,014 ($14,996) $19,094 ($14,996)

$10,000 ($36,010) $10,997 ($15,013) $18,723 ($15,013)

$10,000 ($36,010) $10,235 ($15,775) $16,257 ($15,775)

us ine ss

Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth

Pla nP ro

Starting Balances $10,000 $1,325 $675 $12,000


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Ice Dreams — Sample Plan - Business Plan Software and

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